Tuesday, September 13, 2016

Water price

Governments often control the water price, allocating it on nonprice.
The reason why government is doing like that:

The water price controlled by the government can make negative effects on society. Due

to the law of supply, the less the price is, the lower the amount supplied is. Accordingly, when

the government implements the nonprice on water, it is likely for people to suffer from the lack

of water; ranging from limited hours of service to getting no clean water at all. However, the

government often do this in order to make more people access to clean water and consume it.

Although the law of demand and supply applies to water consumption, it would be relatively

inelastic. It is because water is a necessary required good while we can live without other goods

like cosmetics. When we cannot use water at all, we cannot live any more. From this perspective,

governments often regulate the price on water for people who cannot afford to consume water

due to their financial problem.

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